The athlete-as-brand idea is taking its next step.
Charlotte Hornets rookie PJ Washington Jr., is selling equity in a company he formed to make investments, according to filings with the Securities and Exchange Commission. It’s believed to be the first time an athlete is directly marketing investment in future cash flows to individual investors in a manner approved by regulators.
Washington aims to raise $1.07 million “to advance… brand management, wealth management, strategic investments, data analytics, consulting and other business operations associated with PJ Washington, Jr. and his company PJW Ltd.,” according to the offering statement.
To bring his company to market, Washington has teamed with SportBLX, an alternate asset investment company majority owned by GlassBridge Enterprises, a publicly traded company. Among GlassBridge’s other subsidiaries is ARRIVE Investor, the angel investing company formed by Jay-Z and Roc Nation.
“I signed a deal with a company named SportBLX, and I’m pretty much doing all my investing through them. They gave me some money to invest as well. I’m pretty much using them to further my money,” Washington said in a video posted to the crowdfunding website WeFunder.
Washington and SportBLX are looking to sell 10,700 shares of preferred stock at $100 a piece, according to the offering documents. Preferred shares would collect a 5% annual dividend, although there is no guarantee dividends will be issued.
Essentially, people buying Washington’s stock will be betting the 22-year-old can generate profits from non-basketball work he directs into PJW Ltd., as well as through investments and deals arranged through the company. PJW Ltd., also expects to profit from finder’s fees when other athletes do similar offerings with SportBLX.
Washington has no obligation to direct business or earnings from any of his efforts into PJW Ltd., however. Preferred shares will be redeemed on June 6, 2030, or earlier if the company wants, returning the original $100 plus accrued dividends, according to the WeFunder website. However, the original $100 isn’t guaranteed: “You could lose some or all of your investment,” the offering documents warn investors.
Washington was the Hornets’ first-round draft pick in 2019, averaging more than 12 points a game in his first season, including setting the record for most three-pointers in an NBA debut. The Hornets season ended March 11, when the NBA halted play due to the pandemic. Charlotte was one of eight teams not invited to resume play this summer in the league’s Orlando bubble.
According to his WeFunder page, Washington’s PJW Ltd., is meant to be a savings and investment vehicle for the rising star, whose rookie season exceeded expectations. While structured as a securities offering, the stock does come with perks that likely would appeal to people who are fans first, investors second.
For instance, one share of stock, or $100, gets you a monthly PJ Washington Inc. email newsletter, while $500 gets you a SportBLX sticker and an investment certificate. For $1,000, or 10 shares, people get access to an annual corporate call, including Washington and corporate directors. $10,000 nets two tickets to a Hornets home game, while $100,000 or more buys a Hornets jersey signed by Washington, in addition to 1,000 shares.
SportBLX began selling partial ownership of racehorses in 2019, making this their first deal with an athlete. Its parent company, GlassBridge Enterprises, is traded over-the-counter. Hip-hop star Jay-Z launched ARRIVE in 2017 with GlassBridge to back early-stage start-ups with investment and brand strategy. The offering documents for Washington don’t reference Jay-Z, GlassBridge or ARRIVE.
“We believe that through SportBLX, the securitization of unique sports assets will be part of the mainstream investment industry. This will also serve as entrance to investing for many sports fans, as we desire to increase the financial literacy of the general public,” Washington’s company states on the WeFunder page.
While Washington’s WeFunder page is live, it hasn’t been publicized and has sold just $2,000 worth of shares as of September 3. If the former University of Kentucky student fails to raise $100,000, WeFunder will return investors’ money. If demand is greater than the $1.07 million goal, more shares will likely be sold, according to the offering documents.
While Washington’s offering is believed to be the first permitted direct marketing of an athlete’s cash flows to individual investors, it’s not the first time pro ballplayers have looked to monetize their future earnings in ways accessible to the average person. In 2013, a company named Fantex began selling securities linked to earnings from contracts the company signed with pro athletes. Fantex stopped accepting new individual investor funds in 2017 but remains in operation. In 2008, minor league relief pitcher Randy Newsom tried to sell shares to investors who would get a right to a percentage of his career earnings. Regulators spiked the offering at that time.
(This story has been updated with details of regulatory approval in the first paragraph and Randy Newsom’s investment vehicle in the last paragraph.)